Legislative scrutiny of crypto-related financial risk is intensifying in Washington. US Senator Richard Durbin introduced the No Bailout for Crypto Act on March 19, a proposal designed to prevent the federal government from using taxpayer-backed resources to rescue digital asset companies during periods of market stress.
Bill targets emergency support for crypto businesses
The proposal would restrict federal agencies from extending emergency assistance to firms primarily engaged in crypto trading, custody, or issuance. Its main objective is to draw a firmer line between the risks of digital assets and the protections traditionally available within the regulated financial system.
Durbin argued that when crypto markets collapse, ordinary Americans should not be left paying to save an industry that failed, invoking the lessons of the 2008 financial crisis. He said the legislation is intended to ensure taxpayers do not absorb losses tied to what he described as a questionable sector.
Limits on Fed and FDIC-linked backstops
The bill would also prohibit the use of federal funds to guarantee or stabilize losses connected to digital asset activities, including through programs administered by the Federal Reserve or the Federal Deposit Insurance Corp. (FDIC). It further seeks to block crypto-focused firms from gaining indirect access to federal safety nets through ties with federally insured institutions.
Another key provision would prevent federal banking regulators from waiving these restrictions through existing emergency authorities, narrowing discretionary intervention. For companies with significant digital asset exposure, eligibility would be judged based on their primary business activity, a move aimed at reducing loopholes.
Broader concern over spillover risk
The measure is co-sponsored by several lawmakers, including Elizabeth Warren, Peter Welch, Bernie Sanders, Tina Smith, and Mazie Hirono, and is backed by multiple consumer advocacy groups. Supporters frame it as a guardrail against moral hazard, arguing that participation in volatile crypto markets should not create expectations of federal rescue.
More broadly, the bill reflects congressional concern that crypto instability could spill into insured depository institutions and the wider financial system through interconnected exposures. The policy message is clear: crypto investors and firms should bear the consequences of market risk without relying on an expanded federal backstop.